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Eminent Domain: Pro Tanto Payments

When the Commonwealth or a municipality takes land by eminent domain, the landowner is entitled to "just and reasonable compensation" for his loss. The measure of damages the landowner is entitled to is based on the fair market value of the property taken at the time of the recording of the order of taking.

"Fair market value" in eminent domain cases "is the highest price that a hypothetical arms-length willing buyer would pay to a hypothetical willing seller in a free and open market, based on the "highest and best use" of the property." Boston Edison Co. v. Massachusetts Water Resources Auth., 459 Mass. 724, 731 (2011).

In many cases, the taking authority will elect to make a "pro tanto" payment to the landowner (as opposed to an offer of full settlement) to compensate him for his loss. See M.G.L. c. 79, § 8A. The pro tanto payment can be thought of as an interim payment of damages that a landowner may accept without losing the right to sue for recovery of the full amount of damages he claims is due for his loss of property.

Pro tanto payments are made at or shortly after the time of taking. All too often "that payment is often substantially less than what is ultimately determined to be the fair market value of the property." M.B. Claff, Inc. v. Massachusetts Bay Transp. Auth., 59 Mass. App. Ct. 669, 673 n.4 (2003). Fortunately, landowners who choose to accept the pro tanto payment can still pursue full compensation by filing a petition (complaint) for an assessment of damages in Superior Court (or, in some cases, in federal district court). See M.G.L. c. 79, § 14,

In fact, a cursory review of eminent domain cases reviewed at the appellate level suggests that the Commonwealth and municipalities often underpay landowners on the order of tens and hundreds of thousands of dollars (and, in some extreme cases, millions). This is because there is often a dispute between the landowner and the taking authority as to what the fair market value of the property is, with the dispute sometimes focused on the "highest and best use" of the property rather than the mere valuation of such use. No matter what the underlying dispute is, in most assessment of damages cases it often becomes a battle between the real estate appraisers and other experts testifying for both sides.

Although it is rare, not every taking will result in monetary compensation being paid to a landowner, including in cases where there was a pro tanto payment has already been offered and accepted. This is because "[w]hen valuing the property taken, '[t]he just compensation to which an owner is entitled . . . is regarded in law from the point of view of the owner and not the [taking authority]. In other words, just compensation in the constitutional sense is what the owner has lost, not what the [taking authority] has gained." [citations omitted] Therefore, under these principles, not all takings give rise to an obligation to pay compensation." North Adams Apartments Ltd. P'ship v. City of North Adams, 78 Mass. App. Ct. 602, 608 (2011) (finding that no compensation was due to landowner because he suffered no pecuniary loss when the municipality took his sewer system since he retained right to use sewer system and had already recouped his expenses after building it).

At minimum, landowners faced with property loss resulting from a taking by eminent domain should question the amount of the pro tanto payment offered by the taking authority. In many cases, it may very well be the case that the landowner is entitled to far more.

Written by Kristen M. Ploetz, Esq., of Green Lodestar Communications & Consulting, LLC, on behalf of Jeffrey T. Angley, P.C. Edited by Jeffrey T. Angley, Esq.

Copyright (c) 2011-2012 by Jeffrey T. Angley, P.C. All rights reserved.

Disclaimer: The information contained in this post is general in nature and for educational purposes only. No personal legal advice is being provided. If you have an actual legal issue that needs to be addressed, you should seek the advice of competent legal counsel. This post does not create an attorney-client relationship between the reader and Jeffrey T. Angley, P.C., Phillips & Angley or their attorneys.

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